Newspaper Paywalls

Evolutionary history shows us that doubling-down on your defenses is effective against predators but useless against environmental change. Newspapers locking up their content in paywalls and trumpeting loudly against Google might be effective if Google were merely a predator. But this is the Internet, where copies are free, everyone could be a customer, your competitors are just a click away, and customer loyalty isn't merely a consequence of geography. To treat the Internet merely as just another competitor is to miss the point that it's a new medium which favours some business models and hurts others. To move your content behind a News Corp-style paywall is to be a dinosaur that knows the comet is coming but thinks, "I need thicker armor because I've heard that it has a big tail."

The thing you have to realise is that Apple is the one launching the comets and everyone’s sort of looking at it thinking “wow, that’s beautiful, but when it touches earth it’s too late”

The paywall that’s coming is one that has been proven to be very succesful. It’s Apple’s paywall.
When the iPad launches publishers will embrace it just like the music industry did and the users will love it.
Later on both parties (users & publishers) will sort of regret the steps they took, but by then it might be too late.
The content behind that paywall will not be searchable by Google but Apple will have access to it, and it will sort of become the default search engine for professional content.
One more reason why this is going to happen is Apple’s datacenter, Apple will pay for the bandwidth and server costs.

Derek Balling

Your argument is based on a logical fallacy. You think the newspaper industry is about getting people to read your news, in which case, getting them to read YOUR news instead of someone else’s is key. The problem is that newspapers, like ALL for-profit concerns, have a different goal, that of making money and staying in business.

So how should the newspapers pay the bills? Online advertising revenue isn’t going to fund a budget that puts field-reporters in news bureaus all over the world. And so long as their internet content is free, there’s zero incentive to pay for the print edition, which is their main source of revenue.

Very few newspapers, long-term, are going to be able to keep offering their content for free online while watching their print subscription numbers dwindle and dwindle quarter over quarter. It’s easy to point at the first ones to realize this and brand them as Luddites who don’t get the Internet. However, it’s far more accurate to say that they know their industry better than we do, and they have realized that people aren’t paying for print subscriptions in favor of free online content, and that’s a fast-track to going out of business.

If only 1% of the “freeloaders” switch to the paid-subscription model, I bet it more than covers the “loss of revenue” from advertising to the now-gone freeloaders. At which point, they can ride the tide and wait for the other less-savvy news providers to either join them behind the paywall or put themselves out of business by putting a (better) free product into competition against their own (archaic) for-pay product, a scenario that we know from experience ends badly for the archaic product.

Peter Wayner

Correct me if I’m wrong, but there are striking similarities between the O’Reilly paywall and the one at the WSJ. Both give away some content (I love RADAR) but keep the best, most comprehensive information behind the paywall. Both offer subscription models like Safari. There are probably some difference, but with enough abstraction they look the same to me.

So how are News Corp paywalls different from O’Reilly paywalls?

This I-Hate-Paying-For-Content attitude is pretty tired. There are advantages to paying for content. Good conferences cost money. It’s not necessarily a bad thing to require people to pay for what they consume. I summarize 15 things that are great about paywalls here:

It would have been nice for ads to make everything free, but it’s not going to happen. So we might as well try to engineer the best combination of free and paid that we can. The biggest danger is that this everything-must-free attitude will destroy the businesses of professionals leaving us with a collapsing information ecosystem.

Kimmo Linkama

@Derek:
While I agree that news publishers need to get paid, I disagree that it’s their print edition that will be their main source of revenue. I rather think we’re talking about content, which may be online quite as well as offline.

Assuming it is the print edition they’re aiming for, if you in future need a paid subscription to read news online, why would anyone read the news online paying extra for bandwidth if they can get the same news at the same price delivered to their breakfast table?

From another angle, print editions are obsolete by the time they’re delivered. What kind of business logic is there in selling something that by design is always beyond its best-before date?

@Peter:
Paying for content is OK if the content is worth it. Paying for content to have it contaminated with the same amount of non-content as today (blinking banner ads etc) — I have my doubts.

Some micro-payment type of arrangement might be best. If you see a snippet of an article (free) and would like to read it in full, there should be a way to pay on a per-article basis.

Jim Lindstrom

I disagree that “To move your content behind a News Corp-style paywall is to be a dinosaur”. Yes, Paywalls seem out-dated, and dinosaur like, but these are businesses and they need revenue to survive.

I wanted more space to reply, so I wrote a quick post on my own blog. My basic premise is that the newsroom costs money and the revenue has to come from somewhere. I decided to see what, to pick a newspaper, the NYT’s pricing would have to look like if they went completely digital:

Hi, @Derek. I completely agree that newspapers have to pay the bills. Retreating behind a paywall is perfectly sensible behavior for that short term. But in the long term I believe that newspapers won’t look like they do now, there’ll probably be fewer, and they’ll do things differently. The newspapers should use the time bought by the paywall to experiment, innovate, and adapt. I wish I could say that I had faith that they’d do this, but the way they spent the first fifteen years of the Internet gutting the newsroom does not make me optimistic.

Mark Fuqua

I hope these guys find a way to charge for content. Otherwise, all content will be Blog level quality (no offence intended). It’s a good thing if the internet makes information and entertainment a low barrier activity…it will be a net negative if everyone has to give everything away for free.

Newspapers have staff that do real investigative reporting and draw paychecks for thier efforts. The work they do is important and expensive. I hope they figure out how to make money…you know, I think I’ll go subscribe to The New York Times. Thanks for the encouragement.

Derek Balling

Kimmo: I agree that they’ll move their content online, but it’ll be behind a paywall, otherwise how will they make their money.

At the end of the day, what newspapers have learned is that there are three different people who can, in theory, foot the bill:

– The advertisers… which they’re discovering doesn’t bring in enough money to keep the lights on
– The readers… which has worked for years with the print edition, and is easily translatable to the web
– They can eat the cost … the ones who are doing that are killing themselves slowly and they know it.

Nat: I’m not sure I agree. The “reduced number” of newspapers would necessarily lead to a shortfall of “local news coverage” (CNN simply isn’t going to set up a news bureau to collect the local news in rural upstate NY). Local newspapers fill that role, although they often fill it now “in print” for pay and “online” for free. And so, of course, I read the RSS feed my local newspaper provides.

But if they went behind a paywall? I’d pay them, happily. I’m not convinced there’s anything fundamentally wrong with their model, to be honest, other than the fact that they made the mistake of letting people think they could get something-for-nothing for the past fifteen years, and having to overcome that.

bowerbird

peter said:
> how are News Corp paywalls different from O’Reilly paywalls?

they aren’t.

which is why o’reilly will eventually go extinct too.

but not before they try to sell you a conference ticket…

-bowerbird

Michael Holloway

I’m watching Canadian broadcasters trying to get the ISP’s (Rogers, Quebec corp., Shaw, Bell) to foot the bill for local reporting.

What quickly comes to mind is local events are happening in real time and are being recorded by the participants in real time with social tools. This is a news feed and it’s free and democratic like nothing before.

Perhaps investigative reporting will be paid for by the cost savings realized by social tool mining by bloggers and then newspapers. Go ahead use my phrase, just attribute me. Attribute me enough – then you’ll probably hire me.

I find it quite likely that newspapers will begin to ‘use’ blogs much like the beginning of this thing has worked the other way around.

@m_holloway

Nat Torkington

@Peter: I’d say the difference between O’Reilly’s paywall and the newspapers’ is that we’ve tried new things for publishers: iPhone apps, preprints, DRM-free ebooks, rotating subscriptions, screencasts, videos, training, …. We’ve done more than take the same thing we’ve done in paper for years, save it as HTML, and plonk that HTML behind a credit card signup form.

I apologise for only posting half my thinking on the matter: I was entranced by the armour analogy and forgot to say that yes, defense is natural, but the critical thing is that something big is going to have to change in response to the Internet. I’m starting to look at everything delivered over a computer as software–if you’re not taking advantage of the medium of networked software, then you’re probably going to be left behind by someone who is. This applies to ebooks (cf grumbles about the clumsy annotations and bookmarks on the Kindle) as much as newspapers (hint: feeding me a trickle of news surrounded by looming banks of advertisements isn’t taking advantage of the medium, and nor is taking away half the ads and putting it behind a paywall).

Bruce La Fetra

The comments here talk about business model viability as if delivery of a desired and valued product were assumed. What if the ex-print subscribers of the NYTimes aren’t migrating to free content on NYTimes.com, but are electing to get their news elsewhere? In contrast to most of the rest of the newspaper business, WSJ.com goes beyond slowing the print bleeding and reportedly turns a profit. Oh yeah, the print version of the WSJ is actually growing as the rest of the industry shrinks quarter after quarter. The question becomes: is the the WSJ a special case or is it merely executing better? If it is special, what is special? If it is executing better, how is it executing better?

The answer to the second question is content. There is evidence that people will pay for content they value. Why can “citizen journalists” like Michael Yon support themselves on reader donations while reporting from Iraq and Afghanistan? He is providing deep and in-depth analysis of the type I keep hearing big papers can’t afford. Surely there are economies of scale available to the NYTimes that are not available to Micheal Yon. On the broadcast side, CNN’s ratings look like circulation numbers for the NYTimes, and yet Fox News is booming.

This is not to say that the economics of the traditional news business are not facing enormous challenges that require deep changes. However, making that jump without considering the quality of the product could cause one to jump to incorrect conclusions and think the business model is to blame. For those that disagree, explain the rise of Fox News. They–and the WSJ–clearly have a product more consumers prefer as evidenced by circulation and viewership. Focusing on what consumers want even works for local papers. I read somewhere about a thriving local paper that operated on the principle of mentioning the names of locals. Like the WSJ and Fox News, this small paper was doing fine despite the widespread destruction in the news business generally.